Primary surge resumes, Jeld-Wen, Vantiv lead; new Mercer up more; funds add $217 million

By Paul Deckelman and Paul A. Harris

New York, Dec. 7 – The high-yield primary market resumed the kind of busy pace it set earlier in the week on Thursday, with syndicate sources seeing six issuers bring $2.43 billion of new dollar-denominated and fully junk rated paper to market in seven tranches, in contrast to the lone $300 million tranche which had priced in Wednesday’s market. Over $3.5 billion had priced in multiple deals on both Monday and Tuesday.

Door and window manufacturer Jeld-Wen, Inc. had the big deal of the day, an $800 million two-part offering, evenly split between eight- and 10-year notes.

Vantiv, LLC, a provider of credit- and debit-card payment processing services, brought $500 million of eight-year notes to market as part of a $1.13 billion equivalent two-part, dual-currency transaction.

Besides those forward calendar offerings, the day saw a slew of quickly shopped drive-by deals, including art auction house Sotheby’s $400 million of eight-year notes and Central Garden & Pet Co.’s $300 million 10-year issue.

There was also a pair of unscheduled add-on offerings to existing bond issues, from oil and natural gas sector issuers Covey Park Energy LLC and Tallgrass Energy Partners, LP.

Apparel maker PVH Corp. became the latest U.S.-based company to tap the euro-denominated market, pricing an upsized €600 million 10-year offering.

The syndicate sources also said other deals were in the pipeline for likely Friday pricings, including Itron, Inc., ACE Cash Express, Inc., BMC Software and McGraw-Hill Education, Inc.

Back among the deals which have already priced, secondary market traders saw brisk volume in the new Central Garden & Pet, Vantiv and Tallgrass issues, as well as Wednesday’s offering from forest products producer Mercer International, Inc., with the latter seen adding to the robust gains it had notched in initial aftermarket activity after its pricing.

Away from the new or recently priced issues, hospital operator Community Health Systems, Inc.’s paper was seen both busy and getting battered around.

Statistical market performance measures turned mixed on Thursday after being lower on Wednesday for the first time since Nov. 15.

Another numerical indicator – flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – posted a second straight modest rise this week after breaking out of its month-long negative rut last week, as $217 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, on top of the prior week’s $310 million gain, which had followed four straight weeks of outflows (see related story elsewhere in this issue)..

Jeld-Wen prices tight

The early December flood tide of new issuance continued on Thursday.

Jeld-Wen priced $800 million of senior notes (B1/BB-) in two tranches.

The Klamath Falls, Ore.-based door and window manufacturer priced $400 million eight-year notes at par to yield 4 5/8%. The yield printed at the tight end of yield talk that had been set in the 4¾% area.

Jeld-Wen also priced $400 million of 10-year notes at par to yield 4 7/8%. The yield printed at the tight end of yield talk in the 5% area.

Wells Fargo Securities LLC was the left bookrunner for the debt refinancing deal.

Tallgrass taps 5½% notes

In drive-by action, Tallgrass Energy Partners, LP and Tallgrass Energy Finance Corp. priced a $250 million add-on to their 5½% senior notes due Jan. 15, 2028 (Ba3/BB+) at 101.5 to yield 5.3%.

The reoffer price came at the cheap end of price talk that was announced in the 101.75 area.

Citigroup was the left bookrunner for the bank debt refinancing.

Vantiv in dollars and pounds

Vantiv launched and priced $1.13 billion equivalent of eight-year senior notes (B1/BB) in dollar- and sterling-denominated tranches.

The deal included $500 million of notes that priced at par to yield 4 3/8%. The tranche, which had been marketed with a $500 million minimum size, came 12.5 basis points beneath the tight end of the 4½% to 4¾% yield talk.

Meanwhile a £470 million offering of notes priced at par to yield 3 7/8%, in the middle of the 3 7/8% area price talk.

Morgan Stanley, Credit Suisse and MUFG were joint lead arrangers and joint bookrunners.

Proceeds will be used to pay debt related to Vantiv’s merger with Worldpay Group plc.

Sotheby’s drives by

Sotheby’s priced a $400 million issue of eight-year senior notes (Ba3/B+) at par to yield 4 7/8% in a Thursday drive-by.

The yield printed at the wide end of yield talk that was fixed in the 4¾% area.

Goldman Sachs was the left bookrunner.

The New York-based art auction company plans to use the proceeds to pay off its 5¼% senior notes due 2022 and for general corporate purposes, primarily the repayment or reduction of borrowings under the Sotheby’s Financial Services credit agreement.

Central Garden 10-year deal

Central Garden & Pet priced a $300 million issue of 10-year senior notes (B1/BB-) at par to yield 5 1/8% in a quick-to-market Thursday trade.

BofA Merrill Lynch, SunTrust and BMO were the joint bookrunners.

The Walnut Creek, Calif.-based producer of lawn & garden and pet supplies plans to use the proceeds to finance future acquisitions and for general corporate purposes.

Coven Park comes rich

Covey Park Energy LLC and Covey Park Finance Corp. priced an upsized $175 million add-on to their 7½% senior notes due May 15, 2025 (B3/B) at 104.25 to yield 6.555% in a quick-to-market deal.

The amount was increased from $150 million.

The reoffer price came at the rich end of the 104 to 104.25 price talk.

Wells Fargo was the left bookrunner.

The Dallas-based private oil and gas exploration and production company plans to use the proceeds to repay debt under the revolving credit facility. The additional proceeds resulting from the $25 million upsizing of the deal will be used for general corporate purposes.

PVH upsizes

PVH priced an upsized €600 million issue of non-callable 10-year senior notes (Ba2/BB+) at par to yield 3 1/8%.

The deal was increased from €500 million.

The yield printed in the middle of the 3 1/8% area yield talk. Official talk came in line with earlier guidance in the low 3% area.

Joint bookrunner Barclays will bill and deliver. BofA Merrill Lynch, Citigroup, J.P. Morgan and RBC were also joint bookrunners.

The New York-based apparel company plans to use the proceeds to refinance its 4½% notes due 2022.

Itron talked at 5% area

Dealers set the stage for a busy Friday session.

Itron tightened talked in its $300 million offering of eight-year senior notes (B2/BB-) to 5% from earlier official talk in the 5¼% area.

The deal, to help fund the acquisition of Silver Spring Network and refinance debt, is set to price Friday.

Wells Fargo is the left bookrunner.

Ace talked at 12%, discount

ACE Cash Express talked its $290 million offering of five-year senior secured notes (S&P: B-) with a 12% coupon including 1 to 2 points of original issue discount.

Credit Suisse is the lead bookrunner for the debt refinancing deal, which is set to price Friday.

BMC shifts proceeds

BMC Software shifted proceeds in its debt refinancing bond deal to a $150 million tack-on to BMC Software Finance, Inc.’s 8 1/8% senior notes due July 15, 2021.

The deal is set to price Friday morning.

Credit Suisse is the lead bookrunner.

The proceeds were moved from BMC Software’s euro-denominated offering of six-year senior notes (Caa2/CCC+), which was downsized to €250 million from €380 million.

That deal, which is also being led by Credit Suisse, is also expected to price before the end of the week, sources say.

McGraw-Hill revises talk

McGraw-Hill Education revised price talk on its $250 million offering of senior PIK toggle notes due 2022 (Caa1/CCC+).

New talk has the notes pricing with a 10% coupon at a reoffer price of 99. Earlier talk was in the 9½% area.

Along with higher talk, the call structure was revised, extending call protection to two years form one year.

Books were scheduled to close Thursday and some market watchers were expecting the deal to price late Thursday, however no terms were available at press time.

Credit Suisse is the lead bookrunner.

Tidewater sets roadshow

In news from the Canadian dollar-denominated market, Tidewater Midstream and Infrastructure Ltd. plans to meet with investors on Monday and Tuesday.

The company plans to sell C$100 million of unrated five-year senior notes.

The debt refinancing and general corporate purposes deal is set to price following the two-day roadshow.

CIBC is the sole bookrunner. National Bank Financial is the co-lead agent.

Day’s issues active

In the secondary market, traders said that, not surprisingly, investors remained focus on the new and recently priced issues – a situation they predicted would continue “until all of this new paper” that’s come into Junkbondland both this week and last week, “has been absorbed.”

Several of Thursday’s issues were among the session’s busiest credits.

Traders saw very active dealings in the new Central Garden & Pet 5 1/8% notes due Feb. 1, 2028, with one market source estimating that as much as $48 million may have changed hands, topping the day’s Most Actives list.

He saw the new issue going home at 100½ bid, up from its par issue price.

At another desk, a trader pegged those bonds in a 100 1/8 to 100 5/8 bid context.

And a third saw the bonds get as good as 100¾ bid.

Vantiv’s new 4 3/8% notes due 2025 were also among the day’s most heavily traded credits, with a trader seeing them shoot up to 100¾ bid from their par issue price.

He said that over $31 million of the Cincinnati-based credit- and debit-card transaction processor’s new issue had traded.

A second trader also saw the bonds closing at 100¾ bid, while a third located them within a 100½ to 100¾ bid range.

The traders also saw fairly brisk activity in Leawood, Kan.-based oil and natural gas pipeline operator Tallgrass Energy Partners’ 5½% notes due Jan. 15, 2028, with more than $13 million traded.

One saw the notes at 101 3/8 bid, 101¾ offered while another saw them closing right at the 101½ price at which that add-on deal got done.

However, he noted that while the bonds ended right at their issue price, they were still down by 1 point from the levels at which the existing $500 million of those notes, originally sold in September of this year, had been trading before the quickly shopped tap came to market.

A market source saw the new Sotheby’s 4 7/8% notes due 2025 in a 100¼ to 100¾ bid context, up from their par issue price, while Covey Park Energy’s 7½% add-on notes due May 15, 2025 had pushed up to a 104¾ to 105¼ range, up from their 104.25 issue price.

But he said that volume on both was considerably less than the day’s other new issues had seen.

Traders did not immediately report any significant initial aftermarket action in either tranche of the new Jeld-Wen bonds, which priced relatively late in the session.

Mercer adds to gains

Among some of the recently priced issues that have come to market this week, traders noticed that Mercer International’s new 5½% notes due Jan. 15, 2026 “continued to trade strongly,” as one of them put it.

Those bonds were seen going home on Thursday at 102 bid, up ¼ point on the day, with over $19 million having traded.

The Vancouver, B.C.-based pulp producer had priced its quickly shopped $300 million issue on Wednesday at par and those bonds had firmed smartly in initial aftermarket dealings of more than $43 million, finishing that session at 101¾ bid.

Continental tries comeback

A trader noted that Continental Resources, Inc.’s 4 3/8% notes due Jan. 15, 2028 “moved up a little” after having struggled ever since they had priced at par on Monday – and then proceeded to trade down from that level.

He saw the notes up ½ point on the day, closing at 99 5/8 bid – but allowed that they were still below their issue price.

Some $28 million of the notes hanged hands on Thursday.

A market source said that the Oklahoma City-based oil and natural gas exploration and production company’s $1 billion quick-to-market deal – upsized from $750 million originally – “went below par right after it priced and it hasn’t seen par since.”

Other recent issues busy

Among other recently priced credits, Quicken Loans Inc.’s 5¼% notes due Jan. 15, 2028 gained 3/8 point to end at 99½ bid Thursday on over $19 million of volume.

The Detroit-based online lender priced its $1.1 billion regularly scheduled forward calendar deal on Tuesday at 99.027 to yield 5 3/8%, after upsizing the issue from an initially announced $1 billion. The bonds had firmed slightly from that discounted issue price after that.

Valeant Pharmaceuticals International, Inc.’s 9% notes due 2025 “were off slightly,” a trader said, losing ¼ point to end at 99½ bid, with about $12 million traded.

The Laval, Que.-based drug manufacturer priced its quickly shopped $1.5 billion offering, upsized from $1 billion originally, on Monday at 98.611, yielding 9.25%.

Service Corp. International’s 4 5/8% notes due 2027 closed at 101 3/8 bid, a trader said, up ¼ point, on turnover of more than $14 million.

The Houston-based deathcare company had priced its quick-to-market $550 million deal at a par on Tuesday after upsizing it from $525 million and the new bonds had quickly moved above the 101 bid mark and stayed there.

Community Health hit

Away from the new issues, a trader mentioned that Community Health Systems’ various notes “were down 1½ to 2½ points across their [capital] structure” in fairly active trading.

Another trader saw them hit even harder, estimating that the Franklin, Tenn.-based hospital operator’s most widely traded issue, its 7 1/8% notes due 2020 “was down 3, maybe 4 points from recent levels,” seeing those notes going out around 76 near the end of the day.

At another desk, they were seen closing at 76 5/8 bid, off 2 7/8 points, with over $19 million traded.

The company’s 6 7/8% notes due 2022 meantime lost 1 point on the day, a market source said, ending at 57½ bid, on about the same volume.

There was no fresh news out about the company on Thursday.

But one of the traders suggested that “hospitals may be impacted” by some of the aspects of the tax overhaul bill being hammered out in Congress – and the highly leveraged Community Health is considered one of the weaker names in that industry grouping.

A trader said that Dallas-based sector peer Tenet Healthcare Corp. “didn’t really trade much today,” seeing its paper “unchanged on not much volume.”

Tenet’s 6% notes due 2020 closed at 106 bid, up ¼ point on the day.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after being lower on Wednesday for the first time since Nov. 15. It was the second mixed showing in the past three trading days, with the indicators also mixed on Tuesday after having been stronger all around on Monday.

The KDP High Yield Daily Index lost 5 basis points on Thursday to finish at 71.83, after being unchanged on Wednesday and falling 4 bps on Tuesday, its first loss after two consecutive gains before.

Its yield meantime rose by 2 bps to 5.29%, after coming in by 1 bp on Wednesday. It had also widened by 1 bp on Tuesday following two consecutive narrowings.

But the Markit CDX Series 29 index edged up by almost 1/16 point to 107 23/32 bid, 107 25/32 offered, after being down for the two sessions before that, including Wednesday’s 1/8 point loss.

The Merrill Lynch North American High Yield Master II Index was in retreat for a second straight session, dropping by 0.045% after losing 0.098% on Wednesday, its first downturn after five consecutive gains.

The setback cut the index’s year-to date return to 7.18% from Wednesday’s 7.228% close.

The year-to-date return also remains off from the 7.636% posted on Oct. 24 – the peak cumulative return for 2017 so far.

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